The Implications of Malta’s exemption of Daily Fantasy Sports from Gambling

This summer has been a particularly interesting one for the Maltese gaming industry. I say this primarily because August saw the coming into force of Legal Notice 271/2016 in Malta, clarifying that fantasy sports are exempt from Maltese remote gaming legislation. This long-anticipated move follows the position paper the Malta Gaming Authority (MGA) published in December of last year, based on a lengthy consultation into the regulation of ‘games of skill’.

The authority took this decision because the element of skill and knowledge involved in fantasy sports justified differentiating it from games of chance in terms of licensing and regulation. This exemption is in a sense short lived, as the Maltese Government is committed to introducing legislation to regulate certain skill games which may present increased risks to the consumer. The exemption from the licensing requirement for Fantasy Sports is therefore a temporary measure, to be in effect until the proposed skilled games regulations are enacted into law, as early as January 2017.

The MGA have notified the proposed regulations (issued by the MGA in December 2015) to the European Commission as part of the process for the MGA to roll out its licensing framework to regulate such skill-based games, including Fantasy Sports. The new licensing initiative will create a fresh category of licence, enabling daily fantasy sports operators to apply for “light touch” regulation in Malta.

During this registration period and until the proposed regulatory framework for skill games is put into force, the MGA is registering expressions of interest from fantasy game providers. This has been done in order to monitor daily fantasy sport operations and evaluate potential risks to the consumer. Entities offering fantasy sports may voluntarily notify their operations to the MGA and, subject to meeting certain general conditions applicable under general law, the operator would be formally recognised by the MGA.

The temporary period, the length of which depends somewhat on how long the European Commission take to review the proposed legislation, is expected to end at some point in Spring 2017. Once the Skill Games (with Prize) Regulations are enacted, the interim exemption will no longer apply, thereby mandating that fantasy sport operators will then need to seek authorisation under the new regime.

So what are the big take-away lessons from this?

First, Malta has spotted an opportunity early, has acted appropriately, and will do very well from it. Even at the time of writing this article, I understand the MGA has received dozens of expressions of interest from operators looking to regulate under the new regime, and rightly so. Daily fantasy sports definitely should be classed as games of skill (I know from experience – I’m a fantasy hockey fan!) and the pools licensing regimes offered by other jurisdictions don’t adequately reflect that.

Second, if you are considering licensing a DFS operation then get an expression of interest in quickly. This legislation will prove popular, a backlog of applications is likely when it comes into force, and those who are looking for an early mover advantage are already acting. This isn’t just about notifying the MGA; it’s about finding a gaming licensing partner who can back that intent up with the preparatory work you should be doing now to ensure you are ready when the licence application becomes an option.

Bruce Elliott - Director

Bruce leads Boston’s eCommerce practice as well as being a Director of the Group’s private equity and venture capital arm. Driving growth plans for eCommerce, eGaming, and fintech companies are what get Bruce out of bed in the morning.

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